What’s the #1 Thing I Can Do Right Now That May Protect My 401(k)?
Times like this test us as investors, and we’re left wondering, How do I protect my 401(k)?
The events in the past few weeks have left many of us soul-searching about what we should be doing with our finances to try to recover as best we can from the fastest 30% sell-off in stock market history.
The silver lining here is that the current economic uncertainty is forcing many Americans to rethink how they approach their finances.
Unfortunately, many people wait until markets go down, or the economy starts to tank to start thinking about their 401(k)s.
And, as a result, many investors act out of fear and make decisions that may negatively affect their future balances.
There are others who are driven by news cycles and, as a result, are afraid to make changes to their 401(k)s.
Often, they just don’t know what changes to make and fear making a mistake that will hurt financially. Rather than taking action, they do nothing.
Instead of making decisions that you may regret later, we recommend you take a step back and focus on this one thing…
Becoming an engaged investor.
If you think we’re oversimplifying the solution, take a look at this video where we asked everyday people about important things they perform regular maintenance on.
This interview made one thing clear: people pay more attention to their cars, homes, and updating their electronic devices than they do maintaining what could be their largest asset–their 401(k)s.
While you might think you have better things to worry about than managing your 401(k), we encourage you to think again.
Because if you aren’t engaged with your 401(k), no one else will be.
In our years of helping people increase their 401(k) savings, we’ve seen far too many investors who…
- Don’t understand the financial jargon thrown at them.
- Don’t fully understand how to read a 401(k) or other investment’s quarterly reports.
- Trust that their employer chose a 401(k) plan administrator that offers the best investment choices.
- Think their employer is taking care of their 401(k) for them.
- Avoid seeking third-party advice because they think they don’t have enough money invested, or are too far away or too close to retirement.
Instead of seeking help when they don’t understand, they hope they’ll have enough for retirement, or they hope they are making the right decisions for their future.
Hope isn’t a strategy, folks.
If you really want to potentially maximize your 401(k) performance and have the retirement of your dreams, you need to become engaged with your investments ASAP.
How you do this starts with a decision to take control of your financial future. From there, do what you can to educate yourself.
Keep reading for 3 ways to become an engaged investor.
#1 Review Your Retirement Plan and Goals
With rising healthcare costs, inflation, taxes, down markets, and other unknown future variables, one thing is certain: if you don’t have a plan and take action on that plan now, you’re likely not going to have enough to retire.
Or worse, you may end up with so little saved that you might have to struggle to survive.
If you don’t have a plan in place, do it now.
Get crystal clear on when you will retire and how much you will need for the lifestyle you desire.
From there, take a look at how much you’ve already saved and figure out what you need to do to get back on track.
If you’re stuck, we recommend seeking third-party advice as soon as possible.
Check out our retirement calculator to see how much you may have at retirement, and calculate how professional help may improve your future retirement income.
If you do have a plan, when is the last time you reviewed it? Are you on track?
If not, figure out what you need to catch up, and then work the plan so you can stay on track to potentially maximize your 401(k) performance.
#2 Take Advantage of Free Resources
If you want to alleviate retirement savings stress and avoid making decisions that may negatively impact your financial future, do what you can today to educate yourself as quickly as possible.
Because when you gain the necessary knowledge, you’ll go from being a disconnected investor to one who is engaged with your investments and overall health and well-being of your financial future.
Each week, we host a Facebook Live where we share tips on what you can do right now to potentially protect and grow your retirement savings.
We also post market commentary videos to better assist you with your retirement goals.
Click the images below to watch our latest videos!
Don’t forget to connect with us on Facebook, and be the first to know when a video goes live!
You can also check out our 401(k) Masterclass Videos, which we created to help you potentially supercharge your 401(k) performance.
The best part? It’s complimentary.
In just 13 minutes, you’ll discover 3 strategies that may…
- Improve Your Account Performance – Have more money, creating a fulfilling retirement.
- Manage Risk to Minimize Losses during the Bad Markets – Keep more of what you have made.
- Reduce Fees That Harm Account Performance – So more of your investment grows for your retirement.
#3 Seek Professional Help
Think of investing for retirement like driving cross-country on a family road trip.
If there is a roadblock or other obstacle preventing you from reaching your destination, you need to make the appropriate changes in order to stay on course.
If there’s a change in tax or trade policy, market volatility, or a great investment is now not doing so well…you want to be able to make the best decisions possible to course correct.
If you’ve set up a 401(k) or other workplace retirement plan and you aren’t regularly making changes because you think your employer or plan representative is doing it for you, chances are you may not reach your retirement goals.
Or worse, you may not even come close.
Morningstar conducted a study that monitored the top 100 best-performing mutual funds between January 1, 1998, and December 31, 2013.¹
This study revealed that, in any given year of top best-performing 100 mutual funds in any of those years, in the next year, about half of the time, 8 out of 100 remained in the top 100 the very next year!
If you haven’t made changes in a while, it’s time to get professional help–and do so sooner rather than later.
If you don’t think you have enough savings to warrant seeking third-party expert advice or you think it won’t make much difference, take a moment to let the implications of this study sink in.
A May 2014 study conducted over a 6-year period compared those who had help with managing their 401(k)s and those who did not.
The study revealed…
“On average, the median annual returns for participants in the study who got Help were more than 3% (332 basis points, net of fees) higher than people who didn’t get Help.”²
401(k) Maneuver exists to help you grow and protect your 401(k) account.
Our done-for-you, virtual service allows you to keep your 401(k) right where it is while we review and rebalance your account based on your risk tolerance and current market conditions.
With the goal to increase your account performance over time, manage downside risk to minimize losses, and reduce fees, we strive to protect and grow your retirement savings.
Click below to learn more about what 401(k) Maneuver may do for your future retirement account balance.
Sources:
- David Blanchet, Morningstar Analyst 2014, “The Impact of Expert Guidance on Participant Savings and Investment Behaviors”
- AON Hewitt “Help in Defined Contribution Plans: 2006 through 2012” Published May 2014
